Go (Ayesha) May 4, 2010 ALLAN C. GO, doing business under the name and style "ACG Express Liner," Petitioner, vs. MORTIMER F. CORDERO, Respondent.
MORTIMER F. CORDERO, Petitioner, vs. ALLAN C. GO, doing business under the name and style "ACG Express Liner," FELIPE M. LANDICHO and VINCENT D. TECSON, Respondents. Villarama, Jr. J SUMMARY: Cordero was an exclusive distributor of a shipping company is Brisbane. After incurring travel expenses and closing his first deal with a Cordero, he found out that the latter was directly dealing with the shipping company for the second transaction, cutting off his commissions. Worse, his lawyers also connived with the client and the shipping company to take him out of the picture. He sued them all for conspiring in violating his exclusive distributorship in bad faith and wanton disregard of his rights. The SC held that the existence of the contract and knowledge by the alleged interferers was not disputed. As to the legal justification, it found that while the motive was to reduce the price of the transaction, the bounds of permissible financial interest was transgressed, since Go already incurred expenses in closing the deal, and the lawyers still demanded their cut from him, despite going behind his back in procuring another deal.
Doctrine: The elements of tort interference are: (1) existence of a valid contract, (2) knowledge on the part of the third person of the existence of a contract, and (3) interference of the third person is without legal justification. As to the third element, to sustain a case for tortuous interference, the defendant must have acted with malice or must have been driven by purely impure reasons to injure the plaintiff. Notes: Without So Ping Bun v. CA and Lagon v. CA, this would have been a case for tortious interference. The SC had to rely in Article 19, to uphold its ruling that there was tortious interference. All of this when Article 1314 does not in itself require malice. CAST: (lol) Mortimer F. Cordero – Cordero – Vice-President of Pamana Marketing Corporation (Pamana) Tony Robinson – Robinson – an Australian national based in Brisbane, Australia, who is the Managing Director of Aluminium Fast Ferries Australia (AFFA). Allan C. Go – Go – owner/operator of ACG Express Liner of Cebu City, a single proprietorship Felipe Landicho and Vincent Tecson – Tecson – lawyers of Go FACTS:
1996, Cordero ventured into the business of marketing inter-island passenger vessels After contacting various overseas fast ferry o manufacturers from all over the world, he came to meet Robinson. June and August 1997, Robinson signed documents appointing Cordero as the exclusive distributor of AFFA catamaran and other fast ferry vessels in the Phils
As exclusive distributor, Cordero offered for sale to prospective buyers the 25-meter Aluminum Passenger catamaran known as the SEACAT 25 After negotiations with Go’s lawyers, lawyers, Cordero was able to close a deal for the purchase of 2 SEACAT 25 as evidenced by the MOA (1997) They executed Shipbuilding Contract No. o 7825 for one 1 high-speed catamaran (SEACAT 25) for the price of US$1,465,512.00 Per agreement between, Cordero shall o receive commissions totaling US$328,742.00, or 22.43% of the purchase price, from the sale of each vessel Cordero made 2 trips to the AFFA Shipyard in Australia, and on 1 occasion even accompanied Go and his family and Landicho, to monitor the progress of the building of the vessel He shouldered all the expenses for airfare, o food, hotel accommodations, transportation and entertainment during these trips also spent for long distance telephone calls o to Robinson, Go, Tecson and Landicho However, Cordero later discovered that Go was dealing directly with Robinson when he was informed by Dennis Padua of Wartsila Philippines that Go was canvassing for a second catamaran engine from their company which provided the ship engine for the first SEACAT 25 Padua told Cordero that Go instructed him to o fax the requested quotation of the second engine to the Park Royal Hotel in Brisbane where Go was then staying Cordero tried to contact Go and Landicho to o confirm the matter but they were nowhere to be found, while Robinson refused to answer his calls Cordero immediately flew to Brisbane to o clarify matters with Robinson, only to find out that Go and Landicho were already there in Brisbane negotiating for the second sale Despite repeated follow-up calls, no explanation was given by Robinson, Go, Landicho and Tecson who even made Cordero believe there would be no further sale between AFFA and ACG Express Liner. In a handwritten letter, Cordero informed Go that such act of dealing directly with Robinson violated his exclusive distributorship and demanded that they respect the same. Cordero’s lawyer, Atty. Tabujara, also wrote o ACG Express Liner assailing the fraudulent actuations and misrepresentations committed by Go in connivance with his lawyers in breach of Cordero’s exclusive distributorship appointment Having been apprised of Cordero’s demand o letter, the lawyers of AFFA and Robinson, faxed a letter to Cordero’s lawyers asserting that the appointment of Cordero as o
AFFA’s distributor was for the purpose of 1 transaction only and that the offer of exclusive distributorship was already being revoked for failure of Cordero to Go v Cordero |1
return the draft agreement within a reasonable time. Cordero later testified that, on the same day, Landicho talked to him over the telephone and offered to amicably settle the dispute Tecson and Landicho offered to convince Go o to honor his exclusive distributorship with AFFA and to purchase all vessels for ACG Express Liner through him for the next three (3) years. Landicho set up a meeting with Cordero at Mactan Island Resort Hotel lobby. However, only Landicho and Tecson came o lawyers proposed that they will convince Go o to pay him US$1,500,000.00 on the condition that they will get a cut of 20% so it was agreed that the lawyers will give o Cordero a weekly status report and that the matter will be settled amicably within 3-4 wks Cordero would give Landicho and Tecson their respective “commission,” or “cuts” from his own commission Said amounts were apart from the earlier o expenses shouldered by Cordero for Landicho’s airline tickets, transportation, food and hotel accommodations for the trip to Australia. However, no such weekly status report o was made as it turned out that they had no intention to do so and were just buying time as the catamaran vessel was due to arrive from Australia. Cordero then filed a complaint with the Bureau of Customs (BOC) to prohibit the entry of SEACAT 25 from Australia based on misdeclaration and undervaluation an Alert Order was issued by BOC for the o vessel which in fact arrived on July 17, 1998 Cordero claimed that Go and Robinson had o conspired to undervalue the vessel by around US$500,000.00 Cordero instituted a Civil Case seeking to hold Robinson, Go, Tecson and Landicho liable jointly and solidarily for conniving and conspiring together in violating his exclusive distributorship in bad faith and wanton disregard of his rights, thus depriving him of his due commissions (balance of unpaid commission from the sale of the first vessel in the amount of US$31,522.01 and unpaid commission for the sale of the second vessel in the amount of US$328,742.00) and causing him actual, moral and exemplary damages, including P800,000.00 representing expenses for airplane travel to Australia, telecommunications bills and entertainment, on account of AFFA’s untimely cancellation of the exclusive distributorship agreement Cordero also prayed for the award of moral o and exemplary damages, as well as attorney’s fees and litigation expenses. Cordero presented documentary evidence including photographs of the meeting with Landicho, Tecson and Atty. Tabujara at Shangri-la, photographs taken in Brisbane showing Cordero, Go with his family, Robinson and Landicho, and also various documents, communications, vouchers and bank transmittals. Petitioner:
It was Cordero who stopped communicating. He was not doing his part in making o progress status reports that Go had to engage the services of Landicho to fly to Australia to handle matters. As to the inquiry for a Wartsila ship engine, Cordero misinterpreted this as indication that Go was buying a second vessel. The lawyers had no transaction with Cordero. As to the supposed meeting, this was due to o the malicious demand of Cordero to be given US$3,000,000 as otherwise he will expose in the media the alleged undervaluation of the vessel with the BOC. In any case, Cordero no longer had cause of action for his commission for the sale of the second vessel under the 1997 MOA considering the termination of his authority by AFFA’s lawyers on 1998.
RTC QC: in favor of Cordero. (P16,291,352.43) as actual damages with legal interest from 25 June 1998 until fully paid; P1M as moral damages; P1M as exemplary damages; P1M as atty’s fees. CA: AFFIRMED TC, holding: Cordero (not Pamana) was appointed by AFFA as the exclusive distributor in the Phils. as evidenced by the Certification issued by Robinson, that Robinson and AFFA dealt only with Cordero, and the commissions were directly paid by Robinson to Cordero. That this distributorship was not limited to o the sale of one catamaran He is entitled to a commission of 22.43% However, Cordero is entitled only to o commission for the sale of the first catamaran obtained through his efforts. Cordero is entitled to damages for the breach of his exclusive distributorship agreement with AFFA. As to the P800,000.00 representing o expenses incurred (airfair, phonebills, entertainment, etc.) by Cordero: no basis for such award, the same being the logical and necessary consequences in the field of sales and distribution. CA reduced the awards to P500,000.00, P300,000.00 and P50,000.00, respectively. Appellants were held solidarily liable pursuant to the provisions of Article 1207 in relation to Articles 19, 20, 21 and 22.
BOTH parties appealed Petitioner: Cordero is not the real party-in-interest, it should be Pamana No breach in the alleged exclusive distributorship agreement. They are not liable for unpaid commissions (and also damages, attorney’s fees, and litigation e xpenses) for it was Robinson who undertook to pay Cordero supposed commissions. Even so, they should not be held solidarily liable with Robinson and AFFA Respondent: CA should have sustained TC’s award o f actual damages for his commission for the second vessel,
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since there is sufficient evidence to prove that there was a second sale of a vessel. 1997 MOA provides that go was o contractually bound to buy two (2) vessels from AFFA. Go’s position paper filed before BOC, admits o under oath that he had indeed purchased a second vessel from AFFA. Go admitted in their pre-trial brief that they o had purchased a second vessel. He is entitled to his commissions for the second vessel, since it was his efforts which actually facilitated and set-up the transaction for Go. CA should have sustained original amount of consequential damages awarded by TC considering go’s bad faith and fraudulent conduct
ISSUES : 1. WoN Cordero has a cause of action against Go et al (YES) 2. WoN Go can be held liable even if they are not parties to the contract (YES) 3. WoN Go et al’s interference was unjustified (YES) 4. WoN Go et al’s liability with Robinson and AFFA is solidary (YES) 5. WoN awards justified (YES) HELD: CA AFFIRMED with MODIFICATION: moral and exemplary damages are reduced to P300,000.00 and P200,000.00, respectively RATIO: 1. Cordero has cause of action Cordero is the exclusive distributor and not Pamana (adopted CA’s ratio) AND Cordero has proprietary rights under the agreement that he may protect. Yu v. CA: the right to perform an exclusive distributorship agreement and to reap the profits resulting from such performance are proprietary rights which a party may protect. rights granted not be rendered illusory by interposing a person to obtain goods for which the exclusive distributorship was conceptualized. Cordero was no longer informed and had o clearly been cut off from the transaction until the arrival of the first SEACAT 25 was not paid the balance of his commission o Go et al directly dealt with Robinson behind o Cordero’s back Worse, AFFA even terminated his exclusive o dealership insisting that his services were engaged for only 1 transaction. GO et al: this case not similar to Yu v.CA no conclusive proof that they actually purchased a second SEACAT 25 directly from AFFA hence there was no violation of the exclusive distributorship agreement SC: YES, there is NO sufficient evidence of second purchase. BUT this will not absolve Go et al from liability. They clearly acted in bad faith in bypassing Cordero. Cordero incurred losses as he was not paid the balance of his commission and his exclusive distributorship was revoked.
While it is true that a third person cannot possibly be sued for breach of contract because only parties can breach contractual provisions, a contracting party may sue a third person not for breach but for inducing another to commit such breach. Art. 1314 Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the part of the third person of the existence of a contract; (3) interference of the third person is without legal justification. The presence of the first and second elements is not disputed Go et al were clearly aware of the contract o between Cordero and AFFA Landicho and Tecson aware of Cordero’s o authority, which can be gleaned from their act of immediately furnishing him with copies of bank transmittals everytime Go remits payment to Robinson rd (as to 3 element, see below) o
3. interference unjustified as enunciated and reiterated in S o P i n g B u n v . C A : A duty which the law of torts is concerned with is respect for the property of others, and a cause of action ex delicto may be predicated upon an unlawful interference by one person of the enjoyment by the other of his private property. This may pertain to a situation where a third person induces a party to renege on or violate his undertaking under a contract. General rule: justified interference with the business relations of another exists where the actor’ s motive is to benefit himself It is sufficient if the impetus of his conduct o lies in a proper business interest rather than in wrongful motives He acts in self-protection in this case o NOT necessary that the interferer’s interest outweigh that of the party whose rights are invaded NOT necessary that an individual acts under an economic interest that is substantial, not merely de minimis Unjustified interference: sole motive is to cause harm to the other “induce” – refers to situations where a o person causes another to choose one course of conduct by persuasion or intimidation Malice – connotes ill will or spite, and speaks o not in response to duty implies an intention to do ulterior and unjustifiable harm Malice is bad faith or bad motive
2. Go et al can still be held liable (despite Go’s averments that it was AFF A’s obligation and not theirs)
Lack of malice precludes damages. But it does not relieve a person of the legal liability for entering into contracts and causing breach of existing ones. Gilchrist vs. Cuddy: Not a malicious o interferer if there is no malice and the Go v Cordero |3
o
impulse behind one’s conduct lies in a proper business interest rather than in wrongful motives Lagon v. CA: to sustain a case for tortuous interference, the defendant must have acted with malice or must have been driven by purely impure reasons to injure the plaintiff (unjustified interference)
Exemplary damages is also in order However, RTC and CA awards excessive o Awards reduced o
In this case! act of Go, Landicho and Tecson in inducing Robinson and AFFA to enter into another contract to obtain a lower price for the second vessel resulted in AFFA’s breach of its contractual obligation to pay in full the commission due to Cordero and unceremonious termination of Cordero’s appointment as exclusive distributor such act may not be deemed malicious if impelled by a proper business interest rather than in wrongful motives (Gilchrist ) however! it was demonstrated that Go et o al transgressed the bounds of permissible financial interest to benefit themselves at the expense of Cordero they furtively went directly to Robinson after o Cordero had worked hard to close the deal for them worst, even as Go et al secretly negotiated o with Robinson for the purchase of a second vessel, Landicho and Tecson continued to demand and receive from Cordero their “commission” or “cut” from Cordero’s own earned commission from the first sale lawyers failed to refute the receipts signed by them They clearly connived not only in ensuring o that Cordero would have no participation in the second sale, but also that he would not be paid the balance of his commission This, despite their knowledge that it was commission already earned by and due to Cordero The failure of Robinson, Go, Tecson and o Landicho to act with fairness, honesty and good faith, to the prejudice of Cordero, is further proscribed by CC Art. 19 (complemented with 21)
Go et al: There was another contract superseding the 1997 MOA and that Cordero merely misinterpreted the inquiry on engine price. SC: allegations unconvincing and a mere afterthought It appears that the purported second contract stating a lower price of US$1,150,000.00 (not US$1,465,512.00) was only presented before the BOC to show that the vessel imported was not undervalued by almost US$500,000.00
4. solidarily liable Conformably with NCC 2194, the responsibility of two or more persons who are liable for the quasi-delict is solidary Obligations arising from tort are, by their nature, always solidary.
5. moral damages may be recovered (NCC 2219) Go et al acted in bad faith
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